ADVFN Morning London Market Report: Tuesday 9 November 2021

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London open: Stocks nudge up as investors eye US inflation

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London stocks were just a smidgen higher in early trade on Tuesday as investors eyed the latest US inflation reading.

At 0900 GMT, the FTSE 100 was up 0.1% at 7,305.75.

Neil Wilson, chief market analyst at Markets.com, said: “Mixed, flattish start to trading for European stock markets after a record again on Wall Street as the S&P 500 closed above 4,700 for the first time.

“Gains of about 0.1% for the DAX and FTSE 100 keeping risk just in the green but the Stoxx 50 is flat. For US stocks it’s been a straight line up since the middle of October and whilst there is always this sense that ‘it must pull back soon’, that is sometimes when it’s finding the path of least resistance to the upside.

“Risks are starting to take shape around rising covid cases in mainland Europe and the possibility of new lockdowns – something to watch in the coming days as it could play out with weakness for European equities. German infection rate at the highest since the pandemic started. Meanwhile the inflation threat looms as large as ever – tomorrow’s CPI numbers for the US will be closely assessed.

“Today we get the PPI numbers which are going to show ongoing supply chain pressure and pass through of costs to consumers, with the consensus at +0.6% for the headline number and +0.5% for the core PPI. Recent PMI surveys point in one direction for prices and that’s up.”

On home shores, industry data out earlier showed that retail sales jumped last month as consumers splashed out on Halloween and got festive shopping underway.

According to the latest BRC-KPMG Retail Sales Monitor, total sales grew by 1.3% in October compared to the same month a year earlier, or by 6.3% when compared to October 2019. On a like-for-like basis, retail sales were down 0.2% year-on-year.

Over the three months to October, food sales rose 0.3% on a like-for-like basis, while non-food retail sales eased 0.1%.

The best-performing sectors were clothing, footwear and jewellery and watches. Furniture and computing were two of the weakest categories, hit by supply chain issues including the semiconductor shortage.

Helen Dickinson, chief executive of the British Retail Consortium, said: “Customer demand is getting back on track ahead of Christmas, as sales grew at a faster rate than the month prior, and well above pre-pandemic levels. As social calendars started filling up with festivities, clothing and footwear sales performed well.

“However, there are challenges ahead, with higher prices on the horizon compounded by the many increasing costs faced by consumers.”

In equity markets, Primark owner Associated British Foods jumped to the top of the FTSE 100 after saying it expected “significant progress” in the current year as it reported a rise in annual profits but warned that food prices may have to rise due to increasing costs.

Aerospace and defence giant Rolls-Royce rose as it said that following a successful equity raise, it has now established its small modular reactor business as part of the UK government’s net zero strategy.

BT was also in the black after an upgrade to ‘buy’ from ‘hold’ at Berenberg.

Watches of Switzerland surged to the top of the FTSE 250 after upgrading its full-year outlook following a better-than-expected first-half performance.

On the downside, housebuilder Persimmon fell even as it said it was on track to grow new home completions by 10% this year and targeted a return to pre-pandemic trading levels by 2022.

DCC lost ground even as the sales, marketing and support services group reported a jump in first-half profit and revenue and said full-year results were on track to meet market expectations.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Associated British Foods Plc +6.40% +119.00 1,977.50
2 Rolls-royce Holdings Plc +4.59% +6.50 148.26
3 Melrose Industries Plc +1.85% +3.05 168.05
4 Wpp Plc +1.62% +17.50 1,094.50
5 Informa Plc +1.61% +8.60 542.60
6 Bt Group Plc +1.58% +2.50 160.95
7 Marks And Spencer Group Plc +1.52% +2.90 193.20
8 Fresnillo Plc +1.34% +12.40 938.20
9 Vodafone Group Plc +1.17% +1.30 112.26
10 Antofagasta Plc +1.11% +15.50 1,415.00

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Dcc Plc -2.10% -132.00 6,154.00
2 Smith & Nephew Plc -1.48% -20.00 1,332.00
3 Persimmon Plc -1.40% -38.00 2,683.00
4 Direct Line Insurance Group Plc -1.35% -3.90 284.30
5 Easyjet Plc -1.35% -8.80 641.60
6 Admiral Group Plc -1.31% -38.00 2,862.00
7 Bunzl Plc -1.09% -30.00 2,721.00
8 Burberry Group Plc -0.88% -17.50 1,975.50
9 Hiscox Ltd -0.85% -7.00 821.20
10 Lloyds Banking Group Plc -0.81% -0.40 48.76

 

Europe open: Shares flat as investors eye US data

European shares opened slightly higher in cautious trade at the opening on Tuesday as after mixed trading in Asia overnight as investors eyed a key US inflation report on Wednesday.

The pan-European Stoxx 600 index was up 0.05% in early deals with most regional bourses edging ahead.

Investors are looking ahead to fresh US inflation readings with the latest producer price index due Tuesday and the consumer price index slated expected on Wednesday.

Economists are expecting producer prices to have risen 0.6% in October from September. The consumer price index is also expected to show a 0.6% jump compared to the prior month.

In equity news, shares in Britain’s AB Foods gained 7% as it announced a special dividend after the company’s balance sheet recovered from impact of the Covid pandemic pandemic.

Salmon farmer Bakkafrost slumped 12% as the company reported lower third quarter earnings and cut harvest targets.

Munich Re shares fell 3% as the insurer forecast more Covid-19-related losses.

German agriculture and pharmaceutical firm Bayer rose after reporting a better-than-expected rise in quarterly adjusted earnings.

 

US close: Stocks end session higher after Congress passes infrastructure bill

Wall Street stocks closed higher on Monday after the approval of Joe Biden’s infrastructure spending package in Congress led to gains across the sector.

At the close, the Dow Jones Industrial Average was up 0.29% at 36,432.22, while the S&P 500 was 0.09% firmer 4,701.70 and the Nasdaq Composite saw out the session 0.07% stronger at 15,982.36.

The Dow closed 104.27 points higher on Monday, building on gains registered on Friday as a better-than-expected October jobs report led to another fresh record close for the blue-chip index.

Caterpillar and Deere stock closed higher after the House of Representatives passed a more than $1.0trn infrastructure bill late on Friday and sent the legislation to Joe Biden for his signature. Shares in other infrastructure-related stocks such as NucorVulcan MaterialsUnited RentalsMartin MariettaQuanta and Jacobs Engineering also advanced during the session.

The package, which was passed by the Senate back in August, will provide new funding for transportation, utilities and broadband.

Going the other way, Tesla stock was in the red at the close after founder Elon Musk asked in a Twitter poll whether or not he should dispose of 10% of his stock in response to political clamouring to tax unrealised gains from equity holdings. 58% of respondents voted yes.

AMC Entertainment and TripAdvisor were both slated to report earnings after the close.

On the macro front, no major data points were scheduled for release on Monday.

 

Tuesday newspaper round-up: Rolls-Royce, utilities, ITV, Softbank

Rolls-Royce will move ahead with a multibillion pound plan to roll out a new breed of mini nuclear reactors after securing more than £450m from the government and investors. The engineering firm will set up a venture focused on developing small modular nuclear reactors, or SMRs, in partnership with investors BNF Resources and the US generator Exelon Generation with a joint investment of £195m to fund the plans over the next three years. – Guardian

A government compromise aimed, ministers said, at cutting raw sewage dumping by water companies was passed by MPs on Monday after Conservative rebels backed ministers. Campaigners for clean water said they were disappointed that what they viewed as a less stringent amendment had been approved. They said the government’s compromise was too weak and did not impose a legal duty on water companies to stop releasing raw sewage into waterways. – Guardian

The chairman of ITV is facing an investor rebellion over his role at an obscure investment trust amid claims that he and other directors have presided over a corporate governance fiasco. Sir Peter Bazalgette is under fire over his £17,500-a-year role as independent director at Edge Performance Venture Capital Trust (VCT). The campaign group ShareSoc claims the 68-year-old arts grandee “cannot be relied upon” after he failed to declare past links with Edge’s fund manager, David Glick. – Telegraph

SoftBank has fallen into the red after Beijing’s regulatory blitz against China’s business elite knocked the valuation of technology companies. The Japanese investment giant lost 397 billion yen ($3.5 billion) in the three months to the end of September, compared with a profit of $5.5 billion year earlier. – The Times

Skills shortages are placing the growth of the UK’s technology sector under threat, according to a long-running survey of bosses in the industry. Companies are experiencing acute hiring problems as three in five say that they intend to increase technology investment and two thirds are looking to boost staff numbers, which both stand at record levels, according to a report from the Harvey Nash recruitment group. – The Times

 

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